Economics and Marginal Cost Curve
1. Minimum point of the average variable cost is
a. at the same level of output as the minimum average total cost
b. at a smaller level of output than the minimum average total cost
c. at a larger level of output than the minimum average total cost
d. at the same level of output as the average fixed costs
e. same as minimum marginal cost
2. The multiplant monopolist maximises profits when
a. Marginal cost equals marginal revenue
b. When marginal cost in each plant are equal
c. When average cost in each plant is equal
d. When marginal revenue in each plant is zero
e. When he produces only in the low cost plant
3. If the market price is exactly equal to average cost,
a. the firm shuts down as there is no profit
b. the firm shuts down as the variable costs cannot be covered
c. Continues to operate in the short run
d. The firm shuts down as it cannot cover its fixed
e. The firm shuts down if the price is lower than average variable cost
4. Which of the following would shift a firms short run average cost upward
a. An advance in technology
b. An increase in wages
c. An increase in demand for the product
d. Reduction in excise taxes
e. Reduction in interest costs 5. Which of the following is the supply curve under perfect competition? a. marginal cost curve b. average cost curve c. marginal cost curve above shut down point d. marginal cost curve above break- even point e. average variable cost curve
6. U shape of Long Run Average cost is due to the incidence of
a. External economies of scale
b. Internal economies of scale
c. Internal and external economies of scale
d. Internal economies and diseconomies of scale
e. External economies and diseconomies of scale
The LAC curve is tangent to the lowest point on the SAC curves, when LAC is falling
a. Always
b. Sometimes
c. Never
d. Cannot say
e. None of the above
9. In the long run at equilibrium, a perfectly competitive firm operates a. At minimum
a. at the same level of output as the minimum average total cost
b. at a smaller level of output than the minimum average total cost
c. at a larger level of output than the minimum average total cost
d. at the same level of output as the average fixed costs
e. same as minimum marginal cost
2. The multiplant monopolist maximises profits when
a. Marginal cost equals marginal revenue
b. When marginal cost in each plant are equal
c. When average cost in each plant is equal
d. When marginal revenue in each plant is zero
e. When he produces only in the low cost plant
3. If the market price is exactly equal to average cost,
a. the firm shuts down as there is no profit
b. the firm shuts down as the variable costs cannot be covered
c. Continues to operate in the short run
d. The firm shuts down as it cannot cover its fixed
e. The firm shuts down if the price is lower than average variable cost
4. Which of the following would shift a firms short run average cost upward
a. An advance in technology
b. An increase in wages
c. An increase in demand for the product
d. Reduction in excise taxes
e. Reduction in interest costs 5. Which of the following is the supply curve under perfect competition? a. marginal cost curve b. average cost curve c. marginal cost curve above shut down point d. marginal cost curve above break- even point e. average variable cost curve
6. U shape of Long Run Average cost is due to the incidence of
a. External economies of scale
b. Internal economies of scale
c. Internal and external economies of scale
d. Internal economies and diseconomies of scale
e. External economies and diseconomies of scale
The LAC curve is tangent to the lowest point on the SAC curves, when LAC is falling
a. Always
b. Sometimes
c. Never
d. Cannot say
e. None of the above
9. In the long run at equilibrium, a perfectly competitive firm operates a. At minimum